Online Shopping Spend Beats Physical Stores For The First Time

The media has been full of reports in recent months predicting that 2012 will be the first year where online shopping outstrips the money being spent on the high street for the first time - but is there any evidence to back that up?

In the past few days, several independent research reports have suggested that yes, we have finally reached that milestone.

SDL surveyed 2,000 adults across the UK about where they were going to buy this year's Christmas presents, and revealed 54.2% of overall spend will be online, 40% in-store, and the remainder will come from mail order catalogues and tv shopping channels.

However, there is an age divide - more than half of over 55-year-olds (54.8%) will spend most of their money in physical shops this year.

Among the other findings were:

8.9% of online shopping will take place on a smartphone, tablet or iPad, with 25-34 year olds most likely to buy Christmas gifts through a mobile device or tablet, at 15%.

6.8% of shoppers will be doing most of their Christmas shopping online during working hours, with 11.6% of 24-35 years olds planning to do the majority of their shopping during working hours

Convenience and price are the top factors influencing Christmas shopping decision making online, with online discounts (36.8%), getting the best deal (31.9%) and the convenience of being at home (30.9) holding the most importance

In-store decision making is influenced most by the opportunity to evaluate products in person (44.5%), followed closely by the lack of shipping costs (39.2%) and in-store discounts (39%).

Customer service is highly valued with over half (54.4%) of shoppers being influenced by in-store assistance

In addition, 55.8% of adults said they visited physical shops to review and try out products before then buying them online, underscoring the importance for retailers to have multi-channel operations to cater for this type of shopper.

"While the data from those surveyed showed that more money will be spent online, the physical store is still very important and we believe the shopping season will be made up of customers experiencing brands through multiple channels,” said Bob Hale, chief executive of SDL's campaign management and analytics division.

"Understanding and engaging customers based on their preferred use of each channel creates a customer experience consumers will value during Christmas and all year round."

The rise of the smartphone shopper

Brits are shopping more on our mobiles and tablets than ever before

The UK's communications regulator Ofcom released its own report on 13 December, which showed us Brits like to shop online more than anyone else in the world, driven by use of mobile devices.

UK consumers have now broken the £1,000-a-year spend barrier on internet shopping – more than any other country in our research. In 2011, the per head spending on e-commerce was £1,083 in the UK, up 14% from £950 in 2010.

By comparison, Australia spends the second highest at £842, with Sweden third at £747.

UK adults also like to shop on the move. More than a fifth (23.1%) of UK smartphone users use their device to visit retail websites – the highest level out of the five largest European countries. Germany is second with 22.6%.

Virgin Media Business research found that out of 500 chief information officers working in retail, 73% of them want more technology in shops to help sales in the run up to Christmas. Furthermore, half the respondents VMB spoke to named the retail industry as being most in need of a technological revolution.

Tony Grace, chief operating officer at Virgin Media Business, told Huff Post UK: "A multi-channel approach to attracting customers into stores and making them part with their cash is now a necessity for retailers... There are retailers that have picked up on this potential early, integrating mobile shopping apps, virtual fitting rooms and using social networking sites to influence purchasing decisions.

"Retailers on the high street must look at new ideas to tempt the shopper back through the door in order to keep up with the online revolution. Stores have recognised the fact they need to offer a quicker, sleeker and better value service to keep up with their digital rivals.

"It's going to be interesting to watch how the mobile, online and retail spaces come together and interact. It's highly likely that we'll see more stores adopting a multi channelled approach throughout 2013."

What about SMEs?

The high street isn't dead just yet

It's not just the big retailers making the most of multi-channel however, the small and medium sized businesses are getting in on the action too. But making the public aware of SMEs online shopping options is a difficult challenge.

Still, there's hope for SMEs that don't have a big online presence, as research from Towergate Insurance suggests there's still an appetite to support your local retail heroes.

The insurance broker found 46% of shoppers they quizzed did the majority of their shopping online, but there was still something special about the atmosphere of shopping in physical stores in the run up to Christmas - the twinkly lights, Christmas trees, window displays and the ambience is too good for some people to sacrifice.

Shoppers were also quizzed about whether they choose large chains or small, independent stores for their gifts; 29% said they would be more likely to give the independent stores their custom if they were open at more accommodating hours - particularly significant given a third of people plan to do at least some of their Christmas shopping on weekday evenings.

In addition, less than half (43%) said independent shops offer a good range of stock compared to larger chains, indicating that greater variety may help to pull in the punters.

"We're always interested to find out how people's Christmas shopping habits differ from year to year, especially as the way people shop never stops changing," said Amanda Walton, regional managing director at Towergate Insurance.

"This research shows that buying gifts for loved ones in high street shops is still an important part of the festive season for many people, despite the convenience of online shopping, and we hope it keeps giving a much-needed boost to the nation's small businesses for many years to come."